German economists stoke legal showdown with ECB

FRANKFURT, Jan 25 (Reuters) - A group of influential German
economists urged the country's judges on Monday to take a stand
against one of the European Central Bank's crisis-fighting
tools, highlighting the unease in Germany about how the euro
zone is run.

The call to effectively curb the ECB's freedom to act comes
in a report published by the so-called 'Kronberg Circle', which
includes two of the German government's economic advisors or
'wise men' - Lars Feld and Volker Wieland.

Their recommendation relates to the rejection by the
European Court of Justice (ECJ) - the EU's top legal authority -
of a German group's challenge to the ECB's freedom to buy
government bonds in an emergency.

The ECJ's decision is now being reviewed by Germany's own
constitutional court.

"The German court should send a signal to Frankfurt ... that
you can't do whatever you like," Feld told journalists,
advocating a protest although not an outright rejection of the
ECJ's view. The ECB declined to comment.

If the German constitutional court follows the experts'
advice in its final ruling later this year, this would raise
fresh doubts about the ECB's scope to act.

Any outright rejection by the German judges, which is not
likely, could, for instance, make it hard for the Bundesbank to
participate in ECB bond buying - a major part of the central
bank's policy arsenal.

Such a step could prompt a conflict between Europe's top
court and the judges of its most powerful country.

At the very least, the recommendation from the 'Kronberg
Circle' will rekindle a debate in the euro zone's biggest member
state about the power of the ECB, an institution viewed with
mistrust by many Germans.

Judges in the German constitutional court will make a final
ruling later this year.

They had been leaning in favour of a 35,000-strong group
from Germany, including politicians and academics, who sought to
dismantle the OMT bond-buying scheme the ECB created in 2012 but
never used.

The programme was launched at the height of the euro zone
debt crisis, shortly after ECB President Mario Draghi said the
ECB would do "whatever it takes" to prevent the collapse of the
currency.

The case is a clear reminder that many in Germany have
misgivings about a currency their then-chancellor Helmut Kohl
helped create in the early 1990s but which they now fear has
bound their nation to bail out spendthrifts such as Greece.
(Reporting By John O'Donnell; Editing by Toby Chopra)